Long-term market rates, such as 10y/30y CGB yields, drifted lower in Oct after the sharp rise in late Sep. But short-term bond yields moved sideways, resulting in modestly flatter yield curves. One most frequently asked question on China rates is the size and composition of the fiscal package and its impact on rates. To provide a bit more colour, recent news reports of additional RMB10 trillion to be issued over next few years. This includes RMB6 trillion raised by selling special sovereign bonds over three years starting in 2024, and RMB4 trillion raised through local government special bonds over the next five years. To provide context for how much RMB6 trillion represents, since 2021, the issuance of China Treasuries (including special sovereign bonds) has increased from ~RMB6.7 trillion to ~RMB11 trillion in 2023. As of September 2024, a total of ~RMB9.7 trillion China Treasury bonds has been issued; however, yields declined on both the long and short ends of the yield curve. This trend suggests a strong domestic market capacity to absorb the new RMB6 trillion bond issuance.  The robust demand for Chinese Treasuries is attributed to several factors such as : (1) Aggressive monetary easing by the PBOC; (2) PBOC’s active interventions such as the RMB200 billion net purchase during October and outright reverse repurchase agreements with primary dealers; (3) increasing retail investor acceptance of CGB as safe assets versus bank deposits given the low bank deposit rates. With banks as anchor investors, long-term government bond yields tend to remain relatively stable compared to short-term yields. Curve shape therefore depends on the PBOC's liquidity management in the interbank market. A larger-than-expected approval of government bond issuance quota for the rest of the year is more likely to drive front-end rates higher, resulting in a bear flattener. In light of this bond issuance landscape, and also the higher likelihood of RMB taking a more steadily managed depreciative path under Trump 2.0 to booster exports, Premia China Treasury & Policy Bank Bond Long Duration ETF (9177 HK) remains a good trade which does not hold special sovereign bonds, meaning its maturity distribution will not significantly increase to the 30-years and 50-year maturity bonds due to the special bond issuance.